USA > New York > Nassau County > Long Island; a history of two great counties, Nassau and Suffolk, Volume II > Part 36
USA > New York > Suffolk County > Long Island; a history of two great counties, Nassau and Suffolk, Volume II > Part 36
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Central Park National Bank March 1933
First National Bank, Hempstead March 1933
Bank of Valley Stream April 1933
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BANKING
Sometime prior to the Bank Holiday of 1933, it was reported to the Clearing House that due to the effect of the depression then in process upon the loans and securities of the Citizens National Bank of Freeport, the solvency of the bank was impaired and the capital would need strengthening if the institution was to continue to function successfully. Thus far the Nassau County banks had come through the ordeal with but few closings, but further bank troubles would be fraught with unknown dangers. The banking structure had to be kept sound and above suspicion whatever the cost.
A meeting of the Nassau County banks was held at the Federal Reserve Bank of New York, February 17, 1932, when an arrangement was made whereby the banks of the County and the directors of the Citizens National Bank would jointly contribute funds to strengthen the bank's position. The majority of the stock of the bank was trusteed for the benefit of the contributing banks and the Clearing House ap- pointed a committee from their number to work with the directors as a steering and directional committee, but without any voting power. It was their function to help the bank with its current problems. The Reconstruction Finance Corporation also took an issue of preferred stock.
The writer of this history spent a considerable amount of time on this project over a period of years, but the bank was managed so conservatively that it could not show any appreciable operating profits. Various measures were introduced and some new blood brought in, but the earning power could not be brought back. In the course of time it was concluded that the better course would be to merge with some other bank. As a result the Federal Deposit Insurance Corpora- tion, which had insured the deposits, took out all the undesirable assets and put in the cash, and the merger with the First National Bank and Trust Company of Freeport was approved by the banks, March 4, 1942. The Federal Deposit Insurance Corporation is still (1947) liquidating the assets so taken over. The directors of this bank are to be commended for their courage and their generous contributions, without which it is almost a certainty that the bank would have closed its doors. Instead, however, all depositors have been fully protected and what might have been a tragedy was averted. This was another example of the working together spirit that pervaded the Nassau County banks at that time.
CLEARING HOUSE EXAMINATIONS
Taking a pattern from the New York and other clearing houses, the Nassau County Clearing House had hardly begun to function when the question of Clearing House examinations of the Nassau banks was a topic in hand. Most of the bankers knew that some clearing houses had examining staffs that examined the member banks, and some of these examiners were then the most highly paid in the country. It was first mentioned November 15, 1932, slightly six months after the Clear- ing House began to function. This right of examination could of course be consented to by the members; but many bankers were somewhat fearful of the idea, and many thought it unnecessary and ill-advised.
L. I .- II-23
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In the first place, it would require the services of either volunteers or paid examiners to cover more than fifty banks in a period of a year, or even two. It would add one more process to an already crowded banking calendar, and the banks were not friendly to the idea of letting clearing house men "look over their books." To have singled out certain banks for this process would have stamped them as a little under par and might have led to gossip or other unfavorable reactions. The idea never got much beyond the discussion stage, and in the light of events it is better so. For this reason, among others, some banks were reluctant to join the Clearing House, fearing some drastic innovation of this nature that would prove unsatisfactory and might have been annoying.
On February 10, 1933 the subject of examining the banks was formally brought before the Clearing House members. A motion was made to authorize the examination of any bank at any time, which resolution was amended to the effect that every member of the Clearing House submit to a special committee a copy of the report of the last examination by the State or Federal before February 20, 1933. The banks were directed to furnish any additional information the special committee might require, and to submit to an examination if the com- mittee so decided. Thirty-three banks were in favor of this idea; eighteen were against it. There not being sufficient votes to pass the motion, it was defeated. A motion was then passed that the Clearing House be authorized to examine any bank at any time which in their judgment might be necessary. This motion was carried forty- six to four.
A lengthy discussion then followed in respect to taking over the Sunrise National Bank, and it would appear from the minutes that nothing definite was accomplished, the banks being advised to send their decisions to Mr. Ploch by noon of the following day, and the meeting adjourned at one-thirty a. m. However this may be, the Sunrise Bank was closed in February, 1933. As a matter of fact, the Clearing House meetings were as a rule long drawn out affairs, and the bankers literally burned the midnight oil frequently in discussing the many problems that were crowding in upon them at the time.
DIRECTORS' EXAMINATIONS
Realizing the fact that Directors' Examinations when made by the directors themselves and not by public accountants were in many cases inadequate and perfunctory, a committee was appointed in 1939 to draw up an outline of such examinations as a guide to the directors. After much deliberation the committee submitted such a plan in great detail, showing the exact procedure to follow in making such an examination. The plan as submitted to the banks was, if anything, too exhaustive and too exacting. The member banks were furnished the plan and the committee discharged. How far the plan has been followed is not known.
INTEREST RATES
One of the first questions that faced the Clearing House was the matter of interest rates on both time and demand deposits. The banks
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having taken sizable losses through loans and bond depreciation, were in a mood to curtail operating expenses and reduce the overhead. The simplest and easiest way of course was to cut the interest on both type of accounts. The financial effect on earnings could easily be computed mathematically because it was merely a matter of percent- ages. The chief problem was the effect upon the volume of deposits. As a matter of fact, the banks faced the issue with no little fear and trepidation, well knowing that all banks would not follow a pattern and that competition might come in to hold up rates in one bank while they were reduced in others, with all the unpleasantness such a situation brings about. The general opinion was that if all banks were to go along on a single interest scale the result would not be so pronounced. But that was an obvious improbability. The banks also feared the competition of city banks, particularly the savings banks, in holding up interest rates while we in Nassau reduced them. The minutes of that time are crowded with discussions regarding this problem. While the banks wanted the reduced overhead they did not care to assume the risks of cutting interest rates, and until the government and the State stepped in and made a reduction mandatory the question was more or less unsettled. Interest on public funds was cut to one-half of one per cent, and on savings accounts to two per cent maximum. (Reduced later to one-quarter per cent on public funds.)
One of the prevalent practices of the pre-clearing house days was the payment of interest on demand deposits and particularly public moneys. I well remember the time, some fifty years ago, when the payment of interest on "daily balances" began. I remember that cer- tain banks paid interest on practically all their deposits. Some of these interest minded banks are no more. I have as a banker received as high as four per cent on daily balances. It was not an easy matter to root out such long established practices. While the bankers of Nassau County desired to save the interest such practices cost, they were loath to change over. In the Clearing House minutes I find frequent discussion on the subject of interest on checking deposits, and it was only when the practice was forbidden by the Banking Act of 1933 that we too fell in line and discontinued this costly practice.
There was formerly a widespread idea that the easiest way to obtain deposits was to buy them-that is, to pay interest on all deposits at some rate, and I knew at one time a bank in Connecticut that paid interest on practically every dollar on deposit. That bank also is no more. On December 29, 1932 the first Clearing House regulatory measures were adopted as to interest on deposits. On November 3, 1933, by resolution, no interest could be paid on demand deposits, except as provided in the Banking Act of 1933.
INTEREST ON LOANS
One of the pronounced trends in the period here under review has been the question of interest on loans. Just when the downward trend began to manifest itself cannot be accurately stated, but for some ten years past borrowers have been importuning the banks for a reduction in the interest rate, first on mortgages, and then on collateral
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and other loans. No sooner had the declining interest rates begun to take effect throughout the financial world than borrowers took notice of the lessening value of money and began asking their banks for reductions on existing loans and bargaining on the rate of new ones. Some of these requests have been justified, but some have been in the nature of threat to take the business elsewhere if concessions were not made. Some were even in substance a peremptory demand that the bank reduce the rate under threats.
The competition for loans, particularly in respect to mortgage loans, has been so noticeable that borrowers have now been educated
. FIRST FEDERAL SAVINGS AND LOAN . · ASSOCIATION -
· OF HEMPSTEAD .
10 02/0
First Federal Savings and Loan Association of Hempstead
as to the value of money at interest, and the banks have for several years witnessed a steadily declining rate on mortgage and collateral loans. Here too the competition has been so keen that as a matter of self-preservation banks have been required to cut the rate again and again as the competition did its deadly work. The idea of loans on life insurance policies which were in olden days confined to the insurance companies has spread throughout the country, and banks have been competing with one another for these highly desirable loans by cutting rates even below the income on a government bond in order to get the business.
Nassau County has been no exception to this process, and the first question asked by the borrower today generally is: "What's your rate?" In other words, this is a borrower's and not a lender's market. Time was when the borrower expected the lender to name the rate and accept it as graciously as he could. The tendency today is for the borrower to name the rate he is willing to pay the lender to take it or leave it. In all my banking experience I have never seen competition
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in respect to interest rates on loans so devastating, widespread and costly as it has been during the past five years.
THE BANKS AND WAR BONDS
Under the direction and untiring efforts of Surrogate Howell, Nassau County responded to the War Bond selling in full measure. The bond buying was spread among individuals, corporations with excess money, and banks as investments, together with workers in every field who bought through the pay roll deduction process. The latter process prevailed everywhere. It might be called automatic and in many cases compulsory saving, in that the employer deducted (by agreement) a certain amount on each pay day and applied the funds so retained to the purchase of bonds. It was installment buying of War Bonds.
The sale of war bonds in a community such as Nassau County is difficult to appraise as to the origin because of the many conflicting factors that enter into so large an operation. The direct sale by banks to customers can easily be summed up, assuming the banks keep such records. Added to this, however, should be the purchase of bonds by the banks for their own account in various campaigns, plus pay roll deduction sales and allocations which come from far and near. Con- sequently, the exact figures are almost impossible to obtain without a very close analysis of every transaction and its allocation to the place or the nature of its origin. However, Judge Howell's office which had charge of such sales in Nassau County, estimates that all sales of war bonds, 1941 to 1946, aggregate more than $400,000,000. It is estimated that from 80 to 90 per cent of these sales were properly allocated to the banks of Nassau County.
Supplementing the avenues of buying above enumerated, was the selling of bonds at race tracks, and in the case of Nassau County, at Belmont Park, which was the only track covered by Nassau County banks. The sale of bonds had not gone very far when Judge Howell asked the bankers to take over the race track sales, leaving to them the problem as to how to do it. At first the banks went to Belmont with bonds of various denominations, a typist or two, some change, and sold and delivered the bonds "over the counter," while the women of the A. W. V. S. took orders from the Grandstand and Paddock. The Red Cross women sold stamps.
This plan only produced moderate results. There was no incentive to buy. The Westchester Racing Association then offered free ad- missions to all who bought bonds on Futurity Day. The admission ticket entitled the buyer to a bond when presented at any one of several banks in the Nassau County group at the track on Futurity Day. A sizable number of banks appeared at the track on the ap- pointed day armed with bonds and typists and delivered the bonds in return for tickets. The Racing Association afterwards paid the banks for the amount of tickets turned in.
They had that arrangement only once. The Association next offered free admission to anyone buying a $25.00 bond at the track and free admission to the Club House on the purchase of a $100.00 bond. The
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buyer had to pay the Government tax, but otherwise was admitted free. This really constituted buying the bonds at a discount. The public soon discovered this fact and sales were imposing and highly satisfying. The Association built some forty order booths which were manned by women of the American Women's Voluntary Service, always in uniform. The order was made out in triplicate. The Association also built a number of bank booths. These were manned by bankers. The customer presented his order blank to the bank, paid the amount, had his slips stamped and presented one to the tax window, paid his tax and received a ticket of admission. At first some twenty banks manned the bank windows; but the sales were not large enough to warrant so many bank participations. Gradually the process narrowed down to half a dozen banks, and on the last "meet" to one bank - my own. A corps of women was hired to man the cashier windows for that meet and the work proceeded smoothly and without errors of con- sequence. During the 141 racing days the bank window plan was used there where 90,315 bonds sold with a face value of $4,855,350. The largest day was Memorial Day 1944 when 2,292 bonds were sold with a maturity value of $110,000.
Altogether this experience was educational and highly satisfying - financially and patriotically. The money was escorted to the banks each day under Nassau County police guard, and in all that time there was no single untoward incident. The writer had personal charge of this work from its inception and here records that it was with no little relief that the last bond was sold and the last dollar safely lodged in the bank. He had ridden in the police car with the money in a car ahead, practically every day during this long selling campaign. Al- together it was an experience one does not soon forget, and the Clearing House may well be proud of its war record as a bond salesman at a race track.
CONCLUSION
Here then is the story of the Nassau County Clearing House Association as I remember it and have dug it out of the minutes, which have been exceedingly well kept. It is, altogether, a satisfying story of accomplishhment and united effort, even if it did begin with a tragedy. A clearing house would have come to pass sometime; but it was Judge Howell who conceived the idea on that now memorable night at the Garden City Hotel. He has been our patron saint. What would have happened had Mr. Rounds not come out to that meeting is a matter of speculation. No one knows. I doubt if anyone present would have thought of buying a bank building that nobody wanted and nobody could use, at three o'clock in the morning, and what's more, paying for it in cash before noon of the same day. There were some sixty banks to harmonize and bring into agreement. That was no easy task. The division of opinion was sharp and decisive. But here is the history and here are the facts.
For his outstanding leadership at a critical time ; for his adherence to strict secrecy in vital matters; for his vision and organizing ability and his long service as Chairman, we owe Mr. Ploch a debt of gratitude not easily paid. Nassau has acknowledged his service in a public dinner
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and has "said it with silver." We now record it in history. With that leadership and devotion to a cause, the Nassau County Clearing House Association has become nationally known and famed for the excellency of its work. It has established the fact that a clearing house can function well in what is called "the country." It has set a pattern for others to follow. To be sure, it has a sizable number of banks as its field, and now has resources of more than four hundred millions. It has all that, and more; it has leadership and continuity of manage- ment that is so essential to success. It was born during the most trying time in the history of banking in this country. It arose out of a great necessity for united and prompt action in a crisis. It has justified its existence a thousand fold and prospered far beyond the hopes of all who were present when the first seed was planted in the smoke filled room fifteen years ago. Here is a banking job well done.
WILLIAM H. KNIFFIN.
The Banks of Suffolk County organized as the Suffolk County Bankers' Association in 1924 for the purpose of developing joint action to recover taxes imposed on banks by the State of New York. The banks believed that such taxes constituted a violation of existing statutes. They contended that as these taxes were not imposed upon corporations other than banks they were discriminatory. The action of the Association was successful.
The organization thus created continued as a vehicle by which the banks of Suffolk County, meeting twice a year, spring and fall, might share opinions and act in concert when deemed necessary. The first officers of the Association were: Chairman - Francis Kline, presi- dent, First National Bank of Port Jefferson; Vice-Chairman - B. Frank Howell, cashier, Suffolk County National Bank of Riverhead; Secretary-Treasurer - Joshua A. Overton, cashier, Bank of Smith- town, Smithtown Branch.
In 1931 when evidence of a coming depression was apparent, a committee was appointed by the Association's president to prepare new articles of association in order to more tightly organize for the mutual protection of the banks and their depositors. Although the com- mittee presented its report to the Association, the latter's members were not yet ready to adopt its suggestions.
During the now historic Bank Holiday in March 1933, Fred C. Orth, cashier of the Hampton Bays National Bank and then president of the Association, received a telegram from the Federal Reserve Bank of New York, the officials of which were charged with the grave responsibility of deciding which banks were to be permitted to reopen and which were to remain closed. The telegram informed Mr. Orth that the Federal Reserve Bank's officials would consider recommenda- tions in this matter if made by duly constituted and organized banking or clearing house associations.
Mr. Orth called a meeting of all banks in Suffolk County without delay. At this meeting, held at the Central Islip High School, he
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informed those present of the contents of the above telegram. It was then that the committee report, previously laid on the table without action, was unanimously adopted. The articles of association thereby enacted provided for a report of each bank's condition to a special committee appointed for the purpose, and for uniform rules which placed reasonable restrictions upon bank policies.
Thus was formed the Suffolk County Clearing House Association in 1933, with the following officers: President - Louis Auperin, vice- president, First National Bank and Trust Co., Amityville; Vice-Presi- dent - Phillip R. Tuthill, president, Mattituck National Bank, Matti- tuck; Secretary-Treasurer - Vern L. Furman, cashier, Central Islip National Bank, Central Islip.
These officers were soon in consultation with the supervising au- thorities in connection with the banking situation in the county and through them during this critical period the new Association effectively performed the functions for which it had been organized. Of the fifty commercial banks in the county only six did not open on March 13, 1933 - the date set for reopening. It is significant that all six of these banks, however, did reopen within a period of six months for the latest, without loss of a penny to their depositors.
Suffolk County's record during those trying times for the entire nation thus stands out exceptionally well and reflects great credit upon the bankers of the county.
CHAPTER XXXVII
Medicine
E. K. HORTON, M.D. President, Nassau County Medical Society
TN COMPILING the history and progress of medicine on Long Island, one is forced to review briefly the development of medicine as a whole up to the middle sixteen hundred era when the island began to absorb some of the settlers from the mainland, especially Connecticut.
It can be observed that through the past two or three thousand years since the chronicle of man began, the art of healing, or medicine as it is known today evolved slowly, as people showing a certain pen- chant for caring for the ill and infirm gradually were set apart from others and devoted their time as far as they were able in this pursuit.
It was not always possible for individuals to devote all of their time to this practice because of their own economic necessities and as a result of this the increase in medical knowledge was necessarily slow in developing.
These individuals who were interested in the illnesses they were in constant contact with, very early realized the limitations which their own scanty knowledge set upon them, and so gradually, by observation in searching for reasons for these deviations from the normal they were led to devote more and more time to increase their stock of known facts.
So it came to pass that men like Andreas Vesalius braved the possibility of jail and death to dissect the human body and so like- wise did Susruta, the Indian physician find that diabetes was caused by faulty metabolism of carbohydrates by the simple process of tasting urine from those afflicted and finding sugar therein.
All of these isolated facts were gradually fused into a literature available to those who had the human attributes of gentleness and sympathy, making them especially fitted to care for their ailing brethren. Following this schools were formed and medical training began to assume a scientific background especially in Europe.
All of this knowledge was, however, not available to our pioneer forebears, for the rigors and hardships of life in an unsettled and sparsely populated land offered little to those men who had spent their lives in treating the sick. Experience was the only necessary prerequisite for the practice of medicine in these early colonial times when physicians and surgeons were truly self-made. One needed simply assume the role of either or both and proceed to practice, depending only upon the gullibility of a scattered public. Experience was of course an asset in the absence of other qualifications, and on it alone the village blacksmith, cobbler, cooper or other artisan was invari- ably accepted as the family doctor, a custom which came to be followed as a matter of course. A knowledge of the herbs and how to prepare
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